Filling Up Abroad Becomes a Financial Drain

One hundred fifty dollars to fill ‘er up.

That’s what it cost Adam Mleasai, a 28-year-old builder, to fill his battered green Audi beneath the lighted canopy of a BP station on North London’s Finchley Road.

“It’s so frustrating,” he said, estimating that he is paying 80 pounds a week, about $150, to fill his gas tank. As British fuel prices edge toward 1 pound per liter, nearly $7 a gallon, that buys only about 83 liters, or 22 gallons.

“It is too expensive, but I need my car for work,” Mleasai said late Thursday. “There is nothing else I can do.”

Hurricane Katrina’s devastation along the U.S. Gulf coast, which put a crimp in U.S. oil production and refining, tightened supplies already stretched by a booming worldwide demand. Gasoline and diesel prices have inched up to record levels in many countries.

From London to Tokyo to Mexico City, motorists and lawmakers are asking: How high can the pump prices go?

Ramifications are widespread. In Thailand, the government has proposed closing filling stations earlier to reduce consumption. In China, shortages of state-subsidized fuel have caused long gas lines and piracy. In Germany, the two candidates for chancellor are bickering over who has the better formula for reducing oil dependency. In Mexico, it’s a mixed bag: The government is sitting on a pile of crude-oil revenue, but the country lacks refining capacity, and the high cost of imported refined fuel is hurting industry.

Germany and France also have seen the cost of a gallon climb to nearly $7. Because of high taxes meant to encourage energy efficiency, Europeans long have been accustomed to fuel prices that would make an American driver faint. But as prices increase, Western Europe’s leaders are seeing signs of political fallout.

Truckers in France have blocked refineries in protest, and a similar action is threatened in Britain next week unless the government intervenes. Chancellor of the Exchequer Gordon Brown is expected to maintain a two-year freeze on fuel taxes, which otherwise would rise with inflation, even though it would cost the British treasury $2.2 billion.

Brown is warning that the price of oil might drag down Europe’s growth rate.

“Oil price rises after the recent events in New Orleans could affect Europe more than other countries. The European economy has shown itself to be fragile,” he said Friday at a meeting of finance ministers in Manchester.

Some British filling stations already are charging more than 1 pound per liter for diesel and premium grades of gasoline. Station managers are in the midst of changing their pumps and outdoor signs to accommodate three-digit per-liter prices.

Even with the steep prices, the expectation here is that people will “grit their teeth and bear it,” said Rob Maynard, spokesman for the RAC, a motorist services company that counts about 6.5 million British drivers as members. “On the other hand, it may turn out to be that a pound a liter is some sort of psychological trip switch which does have the effect of making people realize what it has come to.”

Katrina only added a sharp uptick to a yearlong trend of rising oil prices.

Crude prices surpassed $60 a barrel this summer, weeks before Katrina, then surged to $70.85 a barrel Aug. 30, the day after the hurricane hit. Prices pulled back after President Bush agreed to tap the U.S. strategic oil reserve, and other countries in the International Energy Agency followed suit, agreeing to add 60 million barrels to world supplies.

Japan released 7.3 million barrels. Pump prices in Japan are up a bit, but there were no shortages and little real alarm as gas climbed to $4.50 a gallon, compared with $3.97 a year ago.

Naoko Hayashi, a homemaker in suburban Tokyo, says she takes trains and buses whenever she can. But she frequently has to visit her ailing mother-in-law, who lives about 75 miles away.

“No matter how high the gas price, I have to drive,” she said.

Elsewhere in Asia, price increases are setting off shock waves.

In Indonesia, a major oil producer that heavily subsidizes fuel, the higher prices could cost the government more than $13 billion in subsidies this year, a third of the federal budget.

President Susilo Bambang Yudhoyono is preparing to raise fuel prices for the second time this year, a highly unpopular move. In the face of the looming crisis, the currency, the rupiah, has plunged more than 10% to its lowest level in four years.

Malaysia raised the price of gasoline by nearly 20% on July 31 to reduce government subsidies, but now is examining ways to soften the price hike, such as deferring an increase in highway tolls.

In Thailand, the government is considering ordering the closure of service stations as early as 8 p.m. and increasing the use of ethanol, a corn-based fuel.

Australian Prime Minister John Howard, like many European leaders, is reluctant to give in to calls to cut fuel taxes, because the budget depends on that revenue.

“I know this is not a popular thing to say, and I know people are hurting, but the fact is, to have any appreciable impact on the price, you’re looking at billions and billions” of lost government revenue, he told Southern Cross Radio.

China, with its vast population, is second to the United States in oil consumption, and its booming economy has played a significant role in pushing up world prices. But with domestic retail prices set at about $1.66 a gallon, some Chinese refiners have chosen to export oil to obtain higher profits. That has created sporadic shortages in the country.

In Guangdong, southern China’s manufacturing hub, taxi drivers tell of waiting in line three hours a day to buy gas and seeing their earnings drop by about half. And in impoverished Shaanxi province, some villagers near a state pipeline have taken to stealing crude oil and selling it in plastic bags to private refineries, according to state media.

Besides Indonesia, other petroleum-rich nations are feeling the pinch.

For Mexico, the world’s fifth-largest producer, rising prices are proving both a boon and bane.

Record export sales have created a windfall for the government, which depends on the state-owned oil monopoly Pemex to fund about one-third of federal spending.

The Mexican government is sitting on a pile of cash so large that the proposed 2006 budget boasts the first surplus in a decade. The nation has socked enough money away to cover foreign debt payments until 2007.

But a shortage of refining capacity means that Mexico is a heavy importer of finished petroleum products. Independent Mexico City economist Rogelio Ramirez de la O said the nation last year exported about $20 billion in crude oil but imported about $15 billion in gasoline, petrochemicals and other refined products, mostly from the United States.

So while Mexico’s oil sector is riding high, “the rest of the economy is suffering,” Ramirez de la O said. “Mexico no longer benefits in net terms.”

In Europe, the effect could be felt more strongly than in the United States because of the tepid economies of large nations such as France and Germany, said Jean-Philippe Cotis, the chief analyst for the Organization for Economic Cooperation and Development in Paris.

“Hurricane Katrina is a hard blow for the American economy, but it happened in a time of strong growth,” Cotis told Le Monde newspaper. “Katrina and the recent rise of oil prices hit Europeans as they are just recovering and with a growth that is under standards.”

The price increases are hitting hard in Eastern Europe, which is poorer than the rest of the continent.

In Poland, where the average wage is $600 a month, the cost of lead-free 95-octane gasoline has increased 10% to $5.45 a gallon since July.

The government initially refused to act, but Monday it acted to temporarily cut its excise tax on gasoline. The reduction will take effect Thursday. Some Polish officials say the tax cut is still too small, and they fear that many motorists may start traveling to neighboring Ukraine to buy cheaper gas, cutting into government revenue.

In France, a recent front-page headline in the newspaper Liberation said: “Oil: How to Do Without It?” In fact, the French haven’t forgone gasoline, but they are grumbling while they are adapting.

During August, the heaviest travel time of the year for the French, motorists reduced their highway speeds and cut consumption, according to the Professional Gasoline Committee, an association connected with the oil industry.

The committee also found that consumption of unleaded gasoline dropped by 8% in July compared with a year earlier. In one poll, 41% of respondents said they planned to use public transportation or bicycles rather than drive.

“Tomorrow I’ll a buy a new car. I have an old Ford which uses a lot of gas. I’m trading it for a small [Citroen] AX that runs on diesel,” Jean-Marc Dufresne, 43, a state employee, told Le Parisien newspaper.

In Germany, the effects of Hurricane Katrina were quickly felt in the election campaign in which Chancellor Gerhard Schroeder is seeking a third term against conservative Angela Merkel. Both in recent days have called for limits on Germany’s oil dependence and said the country needs to find alternative forms of energy.

Analyst Fritz Vorholz warned in the German weekly Die Zeit that the markets would remain jittery for some time.

“Since nearly all oil taps are opened as far as they will go, any strike, any terror attack and any hurricane is causing fear of shortage in the oil supply.”

His advice: “Buy economical cars.”

Contributing to this report were Times staff writers Marla Dickerson in Mexico City, Jeffrey Fleishman and Petra Falkenberg in Berlin, Mark Magnier and Ching-Ching Ni in Beijing, Richard C. Paddock in Singapore, Sebastian Rotella and Claire Rocher in Paris and Bruce Wallace in Tokyo, and special correspondent Ela Kasprzycka in Warsaw.